A Guide to SME Business Finance

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The document is designed to provide small and medium enterprises (SMEs) with an introduction to debt and equity funding, along with an outline of the information typically required in order to obtain funds.

The Guide was originally produced to meet a need identified by the Mining Technology Services Action Agenda (MTSAA), which, during industry consultations carried out as part of the strategic phase of the MTSAA, determined that access to capital and finance was a key factor in the future success and sustainability of mining technology companies, a sector dominated by SMEs. Although the Guide was produced as a result of the MTSAA’s findings, it can equally be used by SMEs in other sectors. It is an introduction and general guide only, as there will be differences between SME needs, and there will also be differences in the products and the requirements of the different financial institutions, which will change as new financial products are developed.

The authors stress that access to finance can be critical to business growth and success, particularly for start-up companies. It can increase the speed at which a company grows, fund additional product development, or simply provide enough capital on hand to run the business until the break-even point is reached. Larger companies with an established performance record and assets find it much easier to obtain finance than small start-up companies, who may have unproven management and few tangible assets.

The Guide begins by discussing options for financing business growth looks at both debt and equity products. The following section examines the business of finance and aims to highlight the key considerations of finance providers, who seek to balance risk and credit quality – it stresses the need to provide quality information. The next two sections then build on this and provide guidance on both business planning and the main financial information requirements – the appendices include a comprehensive section on the main financial ratios used to assess financial performance, providing definitions as well as formulas.